Long overlooked during the CBD focus of the past three years, some of the best real estate investment opportunities in the office sector today are appearing in rapidly urbanizing suburbs that bring the workplace close to home. Much has been made of the caché offered by downtown office investment and the perceived attraction to high-tech companies and their millennial employees who want to work, shop, and live downtown close to cultural amenities and entertainment. However, for investors staying ahead of the curve, the data tells a different story.

1. CBDs = Scarcity and Prohibitive Costs

The demand for downtown locations has put the squeeze on CBD tenants, increasing rents and reducing availability in CBD locations. In Q2 2016, according to Jones Lang LaSalle, CBD supply constraints and the resulting cost increases continue to affect the market at large. Rents are rising even for Class B properties in downtowns where vacancies are low and/or demand is high.

2. Life in the City Is Not All That It Promises

The “end of the suburbs” is a myth. Surveys have shown that twice as many millennials prefer to live in the suburbs, as opposed to the CBD. Young professionals start families and move back to suburban communities and high quality public schools to raise their children. Concrete is replaced by an abundance of trees, open green space and overall, a healthier environment. In Q1 2016, the Wall Street Journal reported that the rate at which Americans are moving to the suburbs is once again outpacing the rate at which they are moving to cities: “People flocking to cities remain a select class, mostly of the young, educated and affluent who can afford rising prices.” Meanwhile, “urban counties grew by 0.8% in 2015 to roughly 77 million people, compared with suburban counties, which grew by nearly 1% to 159 million people.”

3. Strike While the Iron Is Hot

Today is the optimum time to invest in suburban office properties, as increasing numbers of investors are moving in to take advantage of the improving prospects for this market. Emerging suburban markets still offer outstanding opportunities to acquire high quality real estate assets at well below replacement cost.

The traditional suburbs are gradually changing to meet the needs and desires of younger, millennial suburban communities that increasingly are creating more urbanized amenities and transportation. Suburban office properties whose value will rise fastest are those in transit-oriented suburbs, where people live chose to commuter lines and shopping. The more desirable the location, the higher the rents, and the greater the ROI.